What is pricing policy and why is it important to optimize it?

“Price is the only element of marketing that generates revenue. Everything else is a cost.”

— Philip Kotler, marketing professor

Pricing policy is more than just setting prices. It’s a system that defines how and why a product is priced the way it is. It influences:

• Competitiveness: the right price helps maintain market position.
• Profitability: pricing is the primary lever to manage margin.
• Brand image: pricing shapes perception — affordable or premium.

A mistake in pricing strategy can be costly: loss of customers, broken distribution chains, and financial losses. That’s why more companies are using price monitoring tools, dynamic pricing, and real-time analytics.

Contents

• How Businesses Optimize Pricing Policy: Key Methods
• How to Automate Pricing Management
• For Suppliers: How to Protect Against Uncontrolled Discounts
• Conclusion

How Businesses Optimize Pricing Policy: Key Methods

1. Competitor Price Analysis

Pricing doesn’t exist in a vacuum. Example: if product A is priced at 800 UAH at competitors and 980 UAH in your online store without added value, demand will decline.

Real case: an electronics store connected price monitoring via API and discovered two of their top products were priced 15% higher than market average. After adjustment, margins remained, and revenue grew by 22% in three weeks.

2. Dynamic Pricing

An algorithm automatically adjusts product pricing based on:

• stock levels,
• view frequency,
• competitor prices,
• time of day or day of the week.

Example: a car accessory wasn’t selling at 650 UAH. The algorithm reduced the price to 599 UAH — sales increased, and the item cleared in 4 days.

More about dynamic pricing

3. Customer Segmentation

Different customers react to price differently. Optimization requires segmentation:

• Price-sensitive: driven by discounts and promotions.
• Quality-focused: prefer premium even at a higher price.
• Wholesale and corporate clients: need tailored offers and stable prices.

For suppliers, it’s crucial to know who buys on promotion and who buys regularly. This impacts wholesale pricing and dumping risks.

4. Demand Elasticity

Example: a product with elastic demand — accessories, seasonal items. Lowering price from 400 to 360 UAH can double sales.

In contrast, inelastic categories (e.g., specialty auto tools) can handle higher prices without losing customers.

5. Analytics and Reporting

Pricing based on intuition is risky. Real data helps avoid mistakes:

• price change graphs across competitors,
• category trends,
• margin and sales forecasts based on pricing changes.

Stores using regular analytics find “growth points” — for example, where they can raise prices by 3–5% without harming conversion rates.

How to Automate Pricing Management

API-Based Competitor Monitoring

Connecting to competitor data via API enables:

• daily price updates for key products,
• alerts about MAP violations,
• positioning map creation.

Integration with E-commerce Platforms

On the Horoshop platform, dynamic pricing can be implemented using PriceCop: the store automatically updates prices based on competitor behavior — no manual input needed.

Advanced Analytics

Historical reports, category and brand filters, MAP deviation tracking — all possible with proper integration. Especially useful for suppliers managing distributor networks.

For Suppliers: How to Protect Against Uncontrolled Discounts

PriceCop allows tracking of:

• MAP violations in online stores,
• dealers undercutting prices for sales,
• price erosion chains and margin leaks.

Suppliers receive Excel reports with violators and can act quickly. This helps keep the brand in the premium segment and avoid pricing policy degradation.

Conclusion

Pricing policy is more than numbers in a spreadsheet — it’s an ongoing strategic effort. It determines whether a business will stay profitable and competitive in a changing market.

Online stores benefit from increased sales and reduced manual effort. Suppliers gain control over distribution and partner stability.